51  S'' 

9^^ 


Report  of  the  Examination  of  MILTON  H. 
SMITH,  Vice-President  of  the  Louisville  & 
Nashville  Railroad  Company,  by  the  Inter¬ 
state  Commerce  Commission,  at  Washing¬ 
ton,  D.  C.,  December  19,  1888. 


Extract  from  the  order  of  the  Interstate  Commerce  Commission,  dated  Wash¬ 
ington,  D.  C.,  October  22,  1888:  “Ordered that  the  following-named  carriers,  to 
wit,  the  Louisville  &  Nashville  Railroad  Company,  =■'  appear 

before  this  Commission,  at  Washington,  D.  C.,  on  December  8,  1888,  at  1 1 
o’clock  A.  M.,  for  the  purpose  of  a  general  examination  and  investigation  of  their 
tariffs  and  classifications  as  on  file  in  the  office  of  the  Commission,  and  as  in  use 
upon  their  lines.  ” 


JOHN  P.  MORTON  &  CO.,  PRINTERS,  LOUISVILLE.  Kv. 


Extract  from  the  order  of  the  Interstate  Commerce  Commission,  dated  Washington, 
D.  C..  October  22, 1S88 :  “  Ordered  that  the  following-named  carriers,  to  wit,  the  Louisville 
&  Nashville  Railroad  Company,  *  *  appear  before  this  Commission,  at  Washington, 

D.  C.,  on  December  18, 1888,  at  11  o’clock  A.M.,  for  the  purpose  of  a  general  examination 
and  investigation  of  their  tariffs  and  classifications  as  on  file  in  the  ofl&ce  of  the  Commis¬ 
sion.  and  as  in  use  upon  their  lines.  *  #  * 


Report  of  the  Examination  of  MILTON  H.  SMITH, 
V ice-Pr esident  of  the  Louisville  &  N ashville  Rail¬ 
road  Company,  hy  the  Interstate  Commerce 
Commission,  at  Washington,  D.  C.,  Dec.  19, 1888. 


Mr.  M.  H.  Smith  (Vice-President  of  the  Louisville  &  Nash¬ 
ville  Railroad  Company) :  I  desire  to  make  a  short  statement,  if 
you  will  permit  me. 

The  Chairman  :  All  right,  sir. 

Mr.  Smith  :  The  adjustment  of  rates  for  the  transportation 
of  all  kinds  of  property  between  points  on  a  large  system  of 
roads  and  between  points  on  such  system  and  other  points  on 
connecting  transportation  lines  throughout  the  country,  is  as  is 
well  kn-own  to  your  honorable  body,  an  exceedingly  complex 
and  most  difficult  duty  to  perform  ;  the  most  difficult  and  com¬ 
plicated  one  known  in  commercial  and  financial  experience. 
Some  twenty  years  since,  Mr.  Albert  Fink,  on  being  asked  in  a 
formal  way  as  to  the  requisite  qualifications  to  render  a  person 
competent  to  intelligently  adjust  rates  for  the  transportation  of 
property  upon  a  railroad,  or  a  system  of  railroads,  or  the  rail¬ 
roads  of  a  State,  replied  that  one  competent  to  perform  the  dif¬ 
ficult  duty  ought  to  know  as  much  of  the  business  of  each  ship¬ 
per  as  such  shipper  knew.  While  this  statement  may  be  too 
broad  when  applied  to  certain  kinds  of  property,  it  is  certainly 
not  so  as  to  many  of  the  more  important  articles  of  domestic 
:^commerce.  Many  persons  charged  with  the  duty  of  adjusting 
rates  do  learn  as  much  of  the  values  of  property  and  of  the 
limitations  in  placing  it  upon  the  different  markets  of  the  coun- 


2 


try  as  the  shipper  knows.  In  addition  to  this,  such  agent  must 
necessarily  know  many  things  of  which  the  shipper  is  not  aware. 

I  have,  during  the  past  twenty  years,  had  perhaps  as  much 
practical  experience  in  the  adjustment  of  rates  for  the  transpor¬ 
tation  of  property  in  the  territory  south  of  the  Ohio  and  east  of 
the  Mississippi  River  and  between  points  in  that  territory  and 
other  points  as  any  other  one  person.  While  I  am  familiar  in  a 
general  way  with  the  conditions  under  which  the  various  tariffs 
are  adjusted,  I  am  not  familiar  with  the  details  in  many  specific 
cases,  nor  do  I  believe  that  any  one  can  from  memory  make  an 
accurate,  coherent,  and  lucid  oral  explanation  relative  to  the 
many  rates  and  combinations  used  ;  not  that  it  can  not  be  done, 
but  the  conditions  are  too  complex  to  permit  of  any  person 
doing  so  from  memory  or  in  answer  to  categorical  questions. 
As  it  is  desirable  that  so  far  as  possible  none  but  accurate  infor¬ 
mation  be  given,  I  suggest,  that  when  any  specific  information  is 
desired,  or  when  it  may  appear  to  this  commission  or  any  of  its 
members  that  the  tariffs  of  the  Louisville  &  Xashville  Railroad 
Company  are  in  certain  specific  cases  inconsistent  and  apparently 
unnecessarily  complicated  or  vague,  the  secretary  or  stenogra¬ 
pher  make  a  memorandum  of  the  information  desired,  when  it 
will  not  be  difficult,  within  a  reasonable  time,  to  furnish  it  fully 
and  accurately.  I  make  this  suggestion  because  I  know  that 
even  some  experts,  those  who  have  devoted  much  time  to  the 
adjustment  of  rates  and  who  are  perfectly  competent  to  do  so 
intelligently,  may  readily  become  confused  when  they  undertake 
to  make  oral  replies  to  categorical  questions,  and  unintentionally 
give  erroneous  information,  when  the  same  parties  could,  without 
difficulty,  give  perfectly  accurate  information  from  their  offices, 
where  the  records  of  transactions  are  kept.  The  reason  is,  that 
the  great  multiplicity  of  rates  and  combinations  renders  it  prac¬ 
tically  impossible  for  a  person  to  give  correct  information  from 
memory,  unless  it  might  be  one  who  dev^otes  his  whole  time  to 
the  details  of  the  adjustment  of  rates  upon  a  small  system. 
There  are  other  persons  who  are  capable  of  superintending  in  a 
general  way  the  traffic  of  an  extensive  system,  but  who  are  not 
sufficiently  familiar  with  the  details  to  give  intelligent  replies  to 
many  of  the  questions  your  commission  have  been  asking  yester- 


/ 


3 


clay  and  to-day.  I  think,  perhaps,  I  can  give  you  some  informa¬ 
tion  relative  to  the  methods  in  use  by  the  Louisville  &  Nashville 
Railroad  Company  in  adjusting  its  tariffs;  and,  with  your  per¬ 
mission,  I  would  prefer  to  submit  to  an  examination  before  you 
examine  Mr.  Knott.  I  earnestly  desire  to  give  the  commission 
anv  information  that  I  can,  but  I  shall  not  undertake  to  answer 
(questions  that  I  can  not  answer  correctly.  Mr.  Knott  is  here 
and  will  submit  to  an  examination  ;  but  it  is  but  right  to  inform 
you  that  his  experience  up  to  this  time  has  not  been  as  extensive 
as  that  of  some  of  the  other  officers  of  our  company,  including 
myself.  He  has  performed  the  duties  of  traffic  manager  but  a 
few  months,  and  before  assuming  them  his  duties  were  in  a  dif¬ 
ferent  direction,  which  will  account  for  the  fact  that  he  may  not 
be  as  familiar  with  the  details  of  making  and  adjusting  tariffs 
and  classifications  as  might  be  expected. 

The  Chairman  :  The  purpose  of  our  examination  was  rather 
to  get  at  the  facts  than  to  discuss  the  general  principles  that  we 
have  had  occasion  to  go  over  heretofore,  and  in  respect  to  which 
we  may  all  perhaps  be  su})posed  to  have  become  somewhat  fa¬ 
miliar.  At  the  same  time  it  was  not,  in  any  inquiry  into  the 
facts,  our  purpose  to  go  into  little  things,  and  to  make  inquiries 
in  regard  to  matters  which  a  man  would  not  be  expected  to  have 
in  mind,  but  to  call  attention  simply  to  the  general  methods  of 
making  up  your  tariff  sheets ;  not  perhaps  so  much  the  matter 
of  classification  and  the  difficulties  that  attend  the  same,  as  to 
direct  attention  to  the  method  in  which  you  make  your  joint 
rates,  and  also  to  the  methods  of  making  up  the  tariff  sheets 
that  you  file  with  us,  and  those  which  you  put  before  the  public. 
We  had  supposed  that  perhaps  your  Traffic  Manager  would  be 
more  familiar  with  this  thing  than  anyone  else,  but  of  course  we 
are  glad  to  hear  from  any  member  of  your  official  board,  or  any 
one  of  your  officers  that  the  company  itself  shall  desire  to  put  any 
information  before  us;  and  with  this  understanding — with  the 
understanding  that  we  are  here  mainly  for  the  purpose  of  ascer¬ 
taining  facts,  of  getting  at  general  methods,  and  of  considering 
the  forms  of  doing  business — you  can  of  course  proceed,  if  you 
desire  to  be  heard  before  Mr.  Knott  is  examined. 

Mr.  Smith  :  1  know  from  experience,  that  in  making  verbal 


4 


statements  relative  to  these  complicated  traffic  transactions,  I  am 
certain  to  make  incoherent,  and  possibly  erroneous  statements ; 
and,  therefore,  if  the  statements  that  I  may  make  are  to  be  re¬ 
corded,  I  ask  that,  after  the  stenographer  has  written  out  his  notes, 

I  be  permitted  to  revise  the  transcript  before  it  is  entered  upon 
the  records. 

The  Chairman  :  All  right,  sir.  What  we  want  are  the  facts, 
and  we  should  be  as  anxious  as  vou  could  be  that  there  should  be 
no  mistake  made  in  them.  You  may  proceed. 

Mr.  Smith  :  What  feature  of  our  tariffs  do  you  prefer  that  I 
should  make  a  statement  in  respect  to  ? 

The  Chairman  :  You  can  speak,  if  you  desire  to  do  so,  in  re¬ 
gard  to  the  classifications  prevailing  in  your  system.  AVhat 
classifications  do  you  have  there? 

Mr.  Smith  :  That  of  itself  is  a  pretty  big  subject,  and  you 
may  think  me  somewhat  tedious  and  perhaps  unnecessarily  vo¬ 
luminous.  I  have,  during  a  long  experience,  talked  so  much 
upon  such  matters  that  when  I  get  started  I  do  not  always  know 
when  to  stop. 

The  Chairman  :  Have  you  had  our  second  annual  report  ? 

Mr.  Smith  :  I  have  seen  an  advance  copy,  but  I  have  not  had 
time  to  read  it  carefully. 

The  Chairman  :  Have  you  read  what  appears  there  on  the  • 
subject  of  classifications  ? 

Mr.  Smith  :  I  have  not.  Before  discussing  the  question  of 
the  classifications  used  by  the  Louisville  &  Xashville  Railroad 
Company,  may  it  not  be  well  for  us  to  see  if  we  understand  alike 
what  is  meant  by  the  term  classification,^’  or  why  classifications, 
which  are  in  reality  attempts  to  describe  different  kinds  of  prop¬ 
erty,  are  made  ? 

The  Chairman  :  Well,  sir,  proceed. 

Mr.  Smith  :  A  classification  is  an  alphabetical  arrangement  of 
the  description  of  property  subject  to  transportation,  such  ar¬ 
rangement  being  made  for  the  purpose  of  facilitating  the  quoting 
of  rates  between  a  large  number  of  points.  Were  it  only  re¬ 
quired  to  quote  rates  from  one  point  to  another  point,  it  would 
only  be  necessary  to  make  a  descriptive  list  of  the  property  sub¬ 
ject  to  transportation  and  enter  the  rates  opposite  each  article 


o 


described.  The  grouping  of  articles  into  classes  would  be  un¬ 
necessary.  This  method  of  publishing  tariffs  has  been  and  still 
is  in  limited  use.  Many  years  since  the  Louisville  Nashville 
Railroad  Company  and  connecting  carriers  published  a  tariff  of 
this  kind,  covering  rates  of  transportation  from  New  York  to 
New  Orleans,  the  rates  upon  each  article  being  carefully  adjusted 
to  the  rates  of  competing  steamship  lines  plus  the  cost  of  marine 
insurance  calculated  upon  the  value  of  the  different  kinds  of 
property. 

The  Chairman  :  W^e  have  got  far  beyond  that,  Mr.  Smith. 
That  is  not  what  we  want.  Can  not  vou  state  what  classification 
prevails  on  the  line  of  the  Louisville  &  Nashville  Railroad  Com¬ 
pany  ? 

Mr.  Smith :  I  can  ;  but  I  would  like  to  proceed  in  my  own 
way,  and  will  take  as  little  time  as  possible.  I  desire  to  do  this 
because  I  want,  if  possible,  to  show  clearly  the  impracticability 
of  adapting  a  uniform  classification  to  the  traffic  of  the  Louis¬ 
ville  &  Nashville  Railroad  Company.  I  have  stated  that  the 
method  of  fixing  rates  upon  each  article  transported  is  still  in 
limited  use.  The  tariffs  of  the  steamboats  plying  the  southern 
and  western  rivers  have  been,  and  to  some  extent  are  still  made 
in  this  way,  i.  e.,  by  fixing  rates  upon  the  principal  articles  trans¬ 
ported,  the  rates  being  quoted  per  package,  per  barrel,  per  ani¬ 
mal,  etc.  Rates  so  adjusted  are  applicable  to  but  a  limited  terri¬ 
tory,  the  boats  using  them  plying  sometimes  between  two  points, 
and  at  most  between  comparatively  few  points.  When,  however, 
it  is  attempted  to  compile  a  tariff  covering  the  transportation  of 
property  from  a  number  of  points  to  a  num'ber  of  points,  such 
tariff  is  very  much  simplified  by  endeavoring  to  group  the  de¬ 
scription  of  articles,  upon  which  the  rates  are  to  be  the  same, 
into  classes;  the  greater  the  number  of  points  between  which 
rates  are  quoted,  the  greater  the  necessity  for  the  use  of  such 
classification.  It  is  no  exaggeration  to  say,  that  originally  the 
classifications  of  no  two  companies  were  alike,  each  being  made 
in  accordance  with  the  limitations  of  charters  and  the  individual 
views  of  the  officers  compiling  them,  the  conditions  under  which 
the  traffic  of  the  different  roads  was  being  developed  being  differ¬ 
ent.  I  was  local  freight  agent  of  the  Louisville  &  Nashville 


6 


Railroad  Company  at  Louisville  from  1866  to  1869,  during 
which  time  there  were  in  use  at  that  station  in  adjusting  rates 
and  making  manifests  not  less  than  twenty  different  classifications. 
The  manifest  and  receiving  clerks  were  necessarily  compelled  to 
be  familiar  with  all  of  them.  After  I  assumed  the  duties  of 
General  FreightAgent,  in  1869,  I  for  some  years  made  strenuous 
efforts  to  secure  the  adoption  of  a  uniform  classification  by  im¬ 
mediate  connecting  roads  for  the  purpose  of  facilitating  the  in¬ 
terchange  of  traffic  between  local  stations  on  the  Louisville  & 
[Nashville  Railroad  and  upon  connecting  roads.  In  this  I  was 
only  partially  successful.  Nevertheless,  during  the  past  twenty 
years  considerable  progress  has  been  made  in  that  direction,  and 
now  most  of  the  freight  traffic  transported  by  the  Louisville  & 
Nashville  Railroad  Company  is  subject  to  but  four  or  five  differ¬ 
ent  classifications. 

The  Louisville  &  Nashville  Railroad  Company  owns  and 
controls  what  were  originally  some  twelve  or  more  distinct  cor- 
j)orations,  each  of  which  originally  had  its  own  local  tariff  and 
classification,  each  one  differing  from  all  others.  As  the  Louisville 
&  Nashville  Railroad  Company  acquired  control  of  these  various 
railroads,  either  by  purchase,  lease,  or  ownership  of  a  majority 
of  the  capital  stock,  it  invariably  not  only  replaced  the  tariffs 
governing  the  transportation  of  property  between  non-competi¬ 
tive  stations  on  such  roads  with  others  giving  greatly  reduced 
rates,  but  also  covered  the  entire  system  with  a  uniform  classifi¬ 
cation  and  with  rates  practically  the  same  for  the  same  distances. 
The  reduction  in  the  local  rates,  especially  on  the  roads  acquired 
south  of  Nashville, ‘was  from  twenty-five  to  fifty  per  cent;  and 
I  think  I  may  add  that  even  now  the  local  rates  upon  the  roads 
controlled  by  the  Louisville  &  Nashville  Railroad  Company 
within  the  State  of  Alabama  are  material Iv  less  than  those  of  the 
roads  controlled  by  other  companies  in  that  State.  It  will  thus 
be  seen  that  the  Louisville  &  Nashville  Railroad  Company  has 
done  something  in  the  direction  of  adopting  a  uniform  classifica¬ 
tion,  the  present  local  classification  applicable  to  its  system  hav¬ 
ing  been  substituted  for  not  less  than  twelve  different  classifica¬ 
tions  formerly  in  use. 

The  Louisville  &  Nashville  Railroad  Company  having  care- 


7 


fully  compiled  a  local  tariff  with  a  uniform  classification  cover¬ 
ing  its  entire  system,  which  was  intended  to  and  undoubtedly 
does  in  a  legitimate  way  encourage  the  interchange  of  traffic  be¬ 
tween  points  on  said  system,  such  rates  and  classifications  are 
applied  to  all  traffic  passing  between  local  points  on  its  system 
and  points  on  or  reached  via  connecting  lines.  This  is  believed 
to  be  equitable  and  necessary  to  prevent  unjust  discrimination. 
Should  the  Louisville  &  Nashville  Railroad  Company  accept  a 
classification  of  the  Trunk  Lines  on  shipments  from  New  York 
destined  to  a  point  on  its  line  between  Cincinnati  and  Louisville, 
that  will  make  its  proportion  of  the  rate  from  Cincinnati  eitlier 
less  or  more  than  it  would  receive  on  similar  shipments  for¬ 
warded  from  Cincinnati  proper,  it  would  be  an  unjust  discrimi¬ 
nation  either  for  or  against  Cincinnati.  Should  the  Louisville 
&  Nashville  Railroad  ^Company  accept  a  classification  of  the 
lines  north  of  the  Ohio  River  on  shipments  from  Chicago  des¬ 
tined  to  local  Doints  on  its  lines  south  of  Louisville,  that  would 
make  its  proportion  of  the  rate  from  Louisville  either  more  or 
less  than  it  would  at  the  same  time  be  receiving  for  the  transpor¬ 
tation  of  like  kind  of  proj)erty  from  Louisville  proper  to  same 
destination,  it  would  be  an  unjust  discrimination  in  favor  of  or 
against  Louisville.  The  same  is  true  of  traffic  reaching  our 
lines  at  Nashville,  Montgomery,  and  other  junction  or  terminal 
points.  It  is  true  that  what  is  termed  the  local  classification 
differs  from  the  classification  used  in  adjusting  rates  upon  traffic 
passing  between  competitive  points  for  which  two  or  more  car¬ 
riers  compete.  There  are  a  number  'of  such  classifications,  all 
of  them  subject  to  and  constantly  being  changed  or  modified. 
For  some  years  past  the  tendency  has  been  to  reduce  the  number. 

In  addition  to  the  local  classification  applicable  to  traffic 
passing  between  local  stations  or  between  terminal  and  junction 
points  and  local  stations,  what  is  known  as  the  Southern  Railway 
&  Steamship  Association  classification  is  aj)plied  to  traffic  passing 
from  points  on  and  beyond  the  Ohio  River  to  competitive  points 
and  points  on  connecting  roads  south  and  southeast.  What  is 
termed  the  official  or  Trunk  Line  classification  is  also  applicable 
to  some  traffic.  Two  or  three  other  classifications  are  used  to  a 
limited  extent.  These  general  classifications,  or  classifications 


8 


applicable  to  traffic  passing  between  competitive  points,  or  appli¬ 
cable  to  joint  traffic  of  two  or  more  carriers,  while  apparently 
arranged  by  agreement,  are  in  reality  necessarily  made  to  con¬ 
form  to  the  views  of  that  one  of  the  parties  to  the  agreements 
desiring  to  make  the  lowest  classification,  as  it  is  a  condition 
peculiar  to  the  adjustment  of  joint  and  competitive  rates  for  the 
transportation  of  property  that  the  views  of  the  party  that  in¬ 
sists  upon  making  the  lowest  rates  must  necessarily  be  adopted 
by  all  the  parties  to  the  agreement.  When,  therefore,  a  large 
number  of  carriers  attempt  to  adopt  a  uniform  classification,  as 
is  the  case  with  those  using  what  is  termed  the  Southern  Railway 
and  Steamship  Association  classification,  such  classification  must 
necessarily  be  subject  to  frequent  changes,  or  whenever  any  of 
the  parties  to  the  agreement  desire  to  change  any  article  to  a 
lower  class.  For  the  same  reason  it  is  exceedingly  difficult  to 
raise  the  classification  of  any  article,  as  it  can  only  be  done  by 
the  unanimous  agreement  of  all  the  parties.  This  is  one  of  the 
reasons  why  those  who  attempt  to  adapt  such  classification  to 
their  local  traffic  can  only  do  so  to  a  partial  extent,  their  inter¬ 
ests  requiring  that  there  be  numerous  exceptions. 

In  addition  to  the  necessity  for  adopting  the  classifications 
and  rates  used  by  competing  rail  carriers,  we  are  also  compelled 
to  adjust  rates  in  competition  with  water  carriers;  and  when  we 
do  so,  and  undertake  to  compete  for  the  transportation  of  prop¬ 
erty  between  two  points  directly  located  upon  the  rivers,  we  find 
it  practically  impossible  to  adopt  any  of  the  classifications  in 
use  by  rail  carriers.  While  some  one  of  the  classifications  might 
be  adopted  as. a  basis  or  skeleton,  an  examination  of  the  tariffs 
filed  with  this  commission  will  show  that  the  rates  on  nearly  all 
the  property  transported  in  competition  with  such  water  carriers 
are  based  on  what  are  termed  b}^  some  exceptions  ’’  to  the 
classifications,  or  specials,^^  and  that  the  classification  of 
the  railroad  only  applies  to  miscellaneous  articles  not  specif¬ 
ically  enumerated  in  the  rate  sheets.  I  do  not  think  there 
can  be  a  stronger  illustration  of  the  difficulty  that  must  be 
encountered  in  attempting  to  secure  the  adoption  of  a  uniform 
classification  throughout  the  country  than  this  necessity  of  ad¬ 
justing  rates  to  meet  the  rates  of  water  carriers. 


t 


9 


The  commission  have  expressed  the  opinion  that  in  some  cases 
at  least  the  rail  carriers  were  in  fault,  in  that  they  had  made  the 
rates  unnecessarily  low  in  competition  with  the  water  carriers ; 
that  the  rail  carriers  should  avoid  making  the  rates  so  low  as  to 
render  the  business  unprofitable  to  the  water  carriers,  or  so  low 
as  to  be  less  than  the  actual  additional  cost  of  carriage.  To  ena¬ 
ble  the  railroads  to  make  nicely  discriminating  tariffs  in  compe¬ 
tition  with  water  carriers — rates  that  will  not  be  materially  less 
than  the  rates  of  such  water  carriers — it  is  necessary  to  take  the 
rates  of  the  water  carriers  and  add  thereto  the  estimated  cost  of 
marine  insurance,  and  perhaps’in  some  instances  add  also  some¬ 
thing  for  prompter  service  and  better  care  of  property.  In 
doing  this  it  will  be  readily  seen  that  the  ordinary  railroad  clas¬ 
sification  can  not  be  used.  Some  articles  that  in  railroad  tariffs 
are  classified  as  first  class,  are  of  very  much  less  value  per  hun¬ 
dred  pounds  than  other  articles  in  the  same  class.  Some,  like 
certain  kinds  of  dry  goods,  may  be  worth  one  dollar  per  pound, 
in  which  case  insurance  at  one  half  of  one  per  cent  would  be 
fifty  cents  per  hundred  pounds,  which  should  be  added  by  the 
rail  carrier  to  the  rate  of  the  water  carrier.  Other  articles  in 
the  same  class  may  be  worth  five  cents  per  pound  or  less,  in 
which  case  the  cost  of  insurance  would  be  but  nominal,  and  the 
rate  of  the  rail  carrier  should  closely  approximate  that  of  the 
water  carrier.  In  other  instances,  while  the  value  per  hundred 
pounds  of  the  property  transported  may  not  be  great,  yet,  if  of 
a  perishable  nature,  the  rail  carrier  may  secure  a  materially 
greater  rate  in  consideration  of  prompter  and  more  reliable 
transportation.  It  will  therefore  be  seen  that,  if  a  closely  dis¬ 
criminating  tariff  is  to  be  made  by  the  rail  carriers  in  competing 
with  the  water  carriers,  the  classifications  used  must  be  made 
upon  an  entirely  different  basis  from  that  used  in  adjusting  the 
rates  between  rail  points ;  inasmuch  as  in  the  one  case  the  value 
per  hundred  pounds  of  the  property  transported  is  an  important 
factor,  while  in  the  other  entirely  different  considerations  gov¬ 
ern — such  as  what  the  articles  will  bear,  action  of  competing 
carriers,  the  bulk  as  compared  with  weight,  perishable  or  non- 
perishable,  character  of  package,  etc. 

There  have  been  intimations  that  it  is  desirable  that  the  Lou- 

2 


10 


isville  &  Nashville  Railroad  Company  should  adapt  the  classifi--- 
cation  of  the  Southern  Railway  and  Steamship  Association  to  its 
local  traffic.  This  can  not  well  be  done  without  incurring  the 
loss  of  considerable  revenue.  A  careful  computation  was  re¬ 
cently  made  by  the  auditor  of  the  company  of  the  revenue  actu¬ 
ally  derived  during  a  stated  period  from  the  transportation  of 
certain  classes  of  property  between  certain  representative  local 
stations  under  the  classification  now  in  use;  and  a  careful 
computation  was  also  made  of  the  revenue  that  would  have  been 
derived  from  the  transportation  of  the  same  kind  and  quantity 
of  property  between  the  same  points,  had  the  Southern  Railway 
and  Steamship  Association  classification  been  in  use.  The  loss 
was  ov’er  ten  per  cent. 

Commissioner  Walker  :  Which  is  the  higher  ? 

Mr.  Smith  :  The  local  classification.  Therefore,  had  the  clas¬ 
sification  of  the  Southern  Railway  and  Steamship  Association 
been  in  effect  at  that  time  to  and  from  those  stations,  the  gross 
revenue  from  the  traffic  in  question  would  have  been  reduced 
ten  per  cent,  and  the  net  very  much  more.  Loss  resulting  from 
the  change  of  classification  could,  perhaps,  be  partially  regained 
by  advancing  the  rates  somewhat;  but,  should  we  advance  the 
rates  upon  third  class  articles  because  articles  that  in  our  present 
classification  are  classified  as  second  class  Avould,  by  the  adoption 
of  the  Southern  Railway  and  Steamship  Association  Classification, 
be  reduced  to  third  class,  it  would  cause  an  advance  in  the  rates 
on  many  articles  that  are  classified  as  third  class  in  both  classifi¬ 
cations,  on  which  we  do  not  desire  to  advance  rates,  as  all  changes 
in  our  local  tariffs  during  the  past  twenty  years  have  been  reduc¬ 
tions.  There  are  numerous  other  conditions  which  render  it  im¬ 
practicable  to  adapt  a  uniform  classification  to  all  the  traffic  of  the 
country.  Those  prevailing  in  many  cases  on  short  hauls  differ  ma¬ 
terially  from  those  existing  where  rates  are  made  for  long  distances 
over  a  large  territorv,  and  over  the  lines  of  a  number  of  carriers. 
Hundreds  of  articles  described  in  classifications  are  shipped  only 
from  a  few  stations,  and  the  making  of  rates  on  such  articles  be¬ 
tween  much  the  larger  portion  of  the  stations  is  superfluous. 
For  illustration  of  some  of  the  varying  conditions:  take  the 
article  wood,  which  can  only  be  transported  for  short  distances. 


11 


the  rate  must  be  adjusted  to  the  local  conditions,  such  as  the 
proximity  of  the  wood  to  the  railroad,  the  condition  of  the 
wagon  roads,  the  j)rice  of  coal  at  the  nearest  consuming  market, 
etc.  Take  the  article  pig  iron,  which  has  heretofore  been  prac¬ 
tically  made  at  but  one  point  on  the  Louisville  &  Xashville  sys¬ 
tem,  consisting  of  something  like  twenty-five  hundred  miles  of 
railroad,  it  is  evident  that  it  can  not  be  governed  by  any  of  the 
general  classifications  in  use.  The  rates  are,  in  fact,  based  upon 
the  price  at  which  the  iron  is  sold,  and,  as  its  manufacture  has 
heretofore  been  confined  to  one  point,  it  is  unnecessary  to  issue 
or  change  rates  from  other  stations  on  the  system.  To  do  so 
would  simply  be  to  cumber  the  records  of  the  general  offices,  oi 
the  various  as'encies,  and  of  this  commission.  The  same  is  true 
of  shipments  of  many  other  articles,  such  as  lime,  coal,  coke, 
staves,  to  some  extent  lumber,  etc. 

Again,  even  when  articles  of  low  value,  or  upon  which  the 
rate  of  transportation  forms  a  large  part  of  the  value  of  the 
property  at  point  ^of  consumption,  are  shipped  from  local  sta¬ 
tions,  the  rates  must  necessarily  be  adjusted  to  meet  the  ‘^compe¬ 
tition  of  product  with  product,  the  most  potent  factor  of  compe¬ 
tition.^’  For  instance  the  rate  on  staves  from  the  Knox¬ 
ville  line  to  Louisville,  Ky.,  must  necessarily  be  adjusted  so  that 
the  shipper  can  compete  successfully  with  staves  reaching  Louis- 
via  both  rail  and  water  lines.  Lime  shipped  from  Blount 
Springs,  Siluria,  and  Calera,  Ala.,  to  Xew  Orleans,  can  only 
be  shipped  if  the  rates  are  adjusted  so  as  to  enable  the  seller  to 
compete  with  lime  shipped  in  barges  by  river  from  Cape  Girar¬ 
deau,  Mo.,  and  vicinity.  The  foregoing  are  but  a  few  of  the 
many  illustrations  that  might  be  given  going  to  show  that  it  is 
necessary  to  make  numerous  exceptions  or  modifications  of  the 
classifications  in  use  between  local  stations  and  terminal  or  com¬ 
petitive  points ;  and  to  show  the  difficulty  of  endeavoring  to 
adopt  a  uniform  classification  over  a  large  system  of  railroads, 
covering  all  kinds  of  traffic,  in  competition  with  water  as  well  as 
rail  carriers,  and  between  non-competitive  or  local  stations,  that 
will  be  just  and  equitable  and  permit  of  the  interchange  of  traffic, 
or  that  will  create  instead  of  destroy  commerce. 

Commissioner  Bragg :  You  will  find  that  all  these  matters 


U.  OF  ILL.  LIB. 


12 


\ 


you  mention  are  discussed  in  a  general  way  in  the  annual  report 
of  this  commission,  and  therefore  the  Chairman,  in  asking  you 
the  questions  that  he  did,  desired  to  call  out  the  facts  with  re¬ 
spect  to  the  classifications  you  have.  We  recognize  and  know 
all  the  difficulties  about  these  matters  in  a  general  way. 

Mr.  Smith  :  Before  proceeding  farther,  it  may  be  best  to  re¬ 
call  the  fact,  well  known  to  your  honorable  body,  that  the  Lou¬ 
isville  &  Xashville  Railroad  Company  does  accept  less  for  the 
transportation  of  property  for  the  longer  distance  than  for  the 
shorter  distance ;  but,  in  doing  so,  the  management  does  not  be¬ 
lieve  it  is  violating  the  act  to  regulate  commerce.  You  may 
recall  that  the  management  claimed,  that  when  the  act  to  regu¬ 
late  commerce  took  effect  its  rates  for  the  transportation  of  pas¬ 
sengers  and  property  were  adjusted  in  accordance  with  the  pro¬ 
visions  of  said  act.  You  will  also  recall  that  your  honorable 
body  decided  that  each  carrier  must  judge  for  itself  as  to  what 
constitutes  such  dissimilar  circumstances  and  conditions  as  would 
justify  the  charging  of  less  for  the  longer  than  for  the  shorter  haul. 
This  the  Louisville  &  Nashville  Railroad  Company  has  done, 
and  it  is  believed  that  its  freight  tariffs  are  substantially  in  ac¬ 
cord  with  the  act ;  that  while  there  are  in  many  cases  apparent 
inconsistencies  and  irregularities,  most  of  them  are  the  unavoid¬ 
able  result  of  the  necessity  of  using  one  basis  of  rates  for  com¬ 
petitive  and  another  for  non-competitive  traffic  ;  and  that  where 
such  irregularities  are  apparent  no  real  injury  is  inflicted  upon 
the  parties  directly  interested,  namely,  the  owners  of  the  prop¬ 
erty  transported.  In  your  citation  for  the  Louisville  &  Nash¬ 
ville  Railroad  Company,  and  other  companies  to  appear  here, 
you  refer  to  the  fact  that  in  some  cases  two  classifications  are 
used  in  adjusting  rates  between  two  points.  Such  is  the  fact 
upon  the  Louisville  &  Nashville  Railroad  under  certain  con¬ 
ditions ;  but  I  think  I  can  make  it  clear  to  the  commission  that, 
if  it  is  right  to  accept  a  less  rate,  say  from  Louisville  to  Memphis, 
than  is  accepted  for  the  transportation  of  like  kind  of  property 
from  Louisville  to  intermediate  stations,  in  making  the  rates  be¬ 
tween  Louisville  and  some  of  these  intermediate  stations  the  use  of 
two  classifications  and  two  rates  is  unavoidable.  It  is  evident  that 
the  rate  from  Louisville  to  stations  near  Memphis  can  not  well 


13 


be  greater  than  the  rate  from  Louisville  to  Memphis,  plus  the 
rate  from  Memphis  to  such  stations,  As  the  classification  used 
in  adjusting  rates  from  Louisville  to  Memphis  differs  from  the 
classification  used  for  interniediate  local  stations,  such  combina¬ 
tion  must  be  made  by  the  use  of  the  two  classifications  as  well  as 
the  two  rates  ;  in  other  words,  precisely  the  same  result  is  reached 
or  the  same  difficulty  is  encountered  as  if  the  property  were 
shipped  by  steamboat  from  Louisville  to  Memphis  and  from  there 
by  rail  to  destination,  the  consignee  paying  the  sum  of  the  two 
rates  based  on  the  classifications  of  the  steamboat  and  the  rail¬ 
road  companies.  This,  after  all,  is  something  that  in  no  way 
concerns  the  shipper  or  owner  of  the  property,  so  long  as  he  is 
not  required  to  pay  a  higher  rate  than  the  direct  rate,  when  such 
rate  is  less  than  the  rate  based  on  the  combination  of  the  two 
rates,  or  a  higher  rate  than  the  sum  of  the  combined  rates  when 
less  than  the  direct  rate.  He  need  not  care  that  the  clerk  or 
agent  of  the  carrier  is  put  to  some  inconvenience  to  ascertain  the 
correct  rates,  which  inconvenience  after  all  is  not  a  serious  mat¬ 
ter,  as  with  the  tariffs  before  him  a  clerk  with  very  little  experi- 
rience  can  readily  ascertain  the  rate  on  any  specific  article,  such 
as  hay,  grain,  flour,  etc.,  by  combining  the  two  tariffs.  This  has 
been  successfully  done  for  many  years,  and  transactions  of  the 
kind  are  still  made  dail^^  This  method  of  adjusting  rates,  how¬ 
ever,  may  make  the  rates,  say  from  Louisville  to  stations  near 
Memphis  less  than  to  stations  less  distant  from  Louisville. 

The  Chairman  :  I  gather  from  what  you  have  said  that  there 
are  in  use  on  your  road  two  classifications. 

A.  Several  classifications;  but  two  classifications  are  some¬ 
times  combined  in  making  rates. 

Q.  You  do  not  use  classifications  for  any  other  purpose,  do 
you? 

A.  Classifications  are  used  merely  for  convenience  in  making 
rates. 

Q.  Tell  us  now  what  are  the  classifications  in  use  ? 

A.  As  I  have  already  stated,  we  have  in  use  what  is  desig¬ 
nated  as  a  local  classification,  applicable  ti)  traffic  passing  be¬ 
tween  local  stations  and  between  terminal  points  and  local  sta¬ 
tions;  the  Southern  Railway  and  Steamship  Association  classifi- 


14 


cation,  applicable  to  a  portion  of  the  competitive  traffic  passing 
between  points  on  and  north  of  the  Ohio  River,  and  points  in 
the  South  and  Southeast — what  is  sometimes  designated  as  the 
Trunk  Line  classification — the  classification  used  by  boats  or 
water  carriers  and  some  others,  as  we  are  necessarily  governed 
by  the  action  of  competitors.  All  of  these  classifications  are 
changed  and  modified  from  time  to  time  as  competition  and  the 
requirements  of  the  traffic  seem  to  demand. 

Q.  These  are  what  are  commonly  called  commodity  classifi¬ 
cations? 

A.  What  I  understand  by  the  term  commodity  classifica¬ 
tions,^’  a  term  of  comparatively  recent  use,  is  where  an  article  is 
taken  out  of  the  classification  and  a  rate  made  upon  it ;  or,  as  it 
were,  makino^  it  a  class  bv  itself. 

Q.  When  you  make  a  different  classification  from  the  general 
classification  you  have  spoken  of  on  any  thing  not  a  commodity 
classification,  what  do  you  make  it  on?  You  sav  that  in  addi- 
tion  to  these  general  classifications  there  are  sometimes  rates 
given  on  commodities. 

A.  Yes,  sir;  like  rates  upon  pig  iron  from  Birmingham, 
lime  from  Blount  Springs  to  Xew  Orleans,  or  rates  upon  coal. 

Q.  But  you  say  there  is  something  in  the  nature  of  a  classifi¬ 
cation  besides  these  general  classifications,  and  besides  these  there 
are  commodity  rates.  Xow  what  are  there  in  your  territory  be¬ 
sides  these  ? 

A.  It  may  be  termed  a  commodity  rate,  or  an  exception  sheet. 
It  is,  however,  nothing  but  a  part  of  the  classification.  In  fixing 
commodity  rates,  or  making  exceptions  to  the  classification,  you 
have  really  modified  or  changed  the  classification — have  added  a 
class  or  classes  consisting  of  one  or  more  articles.  . 

Q.  Is  that  any  thing  beyond  what  is  commonly  spoken  of  as 
a  commodity  rate? 

A.  Taking  an  article  out  of  the  general  classification  and 
fixing  a  rate  upon  it  has,  during  the  past  few  years,  been  termed 
making  a  commodity  rate. 

Q.  You  spoke  i)i  giving  an  illustration  as  you  went  along, 
and  I  ask  a  question  to  understand  clearly  what  you  intend  to 
convey  to  us.  You  spoke  of  making  rates  to  these  competitive 


15 


points  which  would  be  sonietiines  less  than  the  rates  to  points  in¬ 
termediate,  and  you  spoke  of  the  necessity  of  making  use  of 
two  classifications  for  that  purpose. 

A.  Yes,  sir. 

Q.  Now,  do  you  not  make  your  rates  specify  the  rates  in  dol¬ 
lars  and  cents  to  these  stations? 

A.  It  has  been  the  custom  of  the  company  to  print  a  tariff 
showing  in  dollars  and  cents  the  rates,  say  from  Louisville  to  all 
local  stations  between  Louisville  and  Memphis ;  which  tariff  is 
applicable  to  all  traffic  moved  from  Louisville  to  such  stations, 
except  where  a  combination  of  the  rates  to  a  competitive  point 
with  the  local  rate  from  such  competitive  point  to  the  adjacent 
local  stations  would  be  less  than  the  direct  rate  so  published. 
It  is  impracticable  to  publish  a  tariff  showing  in  dollars  and 
cents  the  actual  rates  that  may  be  made  from  time  to  time  by 
combining  the  competitive  and  local  rates,  say  from  Louisville  to 
stations  near  Memphis.  By  the  term  impracticable,  I  do  not 
mean  that  it  is  impossible,  but  that  it  is  impracticable  in  a  busi¬ 
ness  sense ;  that  is,  that  the  injury  to  any  interest  or  the  injustice 
to  any  one,  if  any  injury  or  injustice  results  from  the  failure  to 
publish  the  actual  rates  that  may  be  made  by  a  combination  of 
the  two  rates,  is  not  sufficient  to  justify  the  labor  and  expense 
that  would  have  to  be  incurred  in  publishing  the  rates  so  made  in 
dollars  and  cents.  In  order  to  publish  a  tariff  showing  in  dol-# 
lars  and  cents  the  rates  that  may  be  made  by  a  combination  of 
competitive  and  local  rates,  it  would  be  necessary,  first,  to  make 
a  new  classification  combining  the  two  classifications  in  use  ; 
that  is,  certain  articles  would  be  found  to  be  classified  as  first 
class  in  both  classifications  ;  other  articles  would  be  classed  as 
second  class  in  both  ;  other  articles  would  be  found  to  be  classi¬ 
fied  as  first  class  in  one  and  second  in  the  other,  and  these  would 
have  to  be  combined  into  a  separate  class.  Possibly  some  articles 
that  are  classified  as  first  class  in  one  classification  might  be 
classified  as  third  or  fourth  class  in  the  other.  Each  of  these 
would  have  to  be  combined  into  a  class.  Then  the  manv  rates 
quoted  on  designated  articles,  or  what  are  termed  by  some  com¬ 
modity  rates,  in  the  competitive  classification,  say  from  Louis¬ 
ville  to  Memphis,  would  have  to  be  combined  and  the  rates 


16 


adjusted  to  the  classification  thus  compiled,  which  rates  would 
probably  not  be  alike  to  any  two  of  the  intermediate  stations. 
Then  it  would  of  course  be  necessary  to  reprint  these  tariffs 
every  time  a  change  of  rates  or  classifications  was  made  from 
Louisville  to  the  competitive  point.  After  this  had  been  done,  it 
would  still  be  necessary  to  examine  the  two  tariffs;  that  is,  the 
one  based  upon  the  local  classification,  and  that  based  upon  the 
combined  classification,  and  use  the'  one  giving  the  lowest  rate. 
As  stated  before,  this  is  not  impossible ;  but,  as  very  little  traffic 
is  shipped  from  Louisville  to  stations  near  Memphis,  it  may,  I 
think,  be  deemed  impracticable  to  compile  and  publish  a  tariff 
showing  the  rates  in  dollars  and  cents  that  result  from  a  com¬ 
bination  of  the  two  classifications  and  the  two  rates,  when  such 
rates  are  lower  than  the  local  rates  ;  or  showing  the  local  rates 
when  less  than  the  rates  made  by  the  combined  tariffs.  It  is,  how¬ 
ever,  entirely  feasible  and  practicable  for  our  receiving  clerks, 
bill  of  lading  clerks,  agents,  and  manifest  clerks,  to  readily 
quote  rates  on  any  designated  article,  say  flour,  from  Louisville 
to  any  of  the  local  stations,  made  by  the  combination  of  the 
two  rates,  by  simply  referring  to  the  tariff  and  ascertaining  the 
rate  on  flour,  Louisville  to  Memphis,  and  adding  thereto  the 
rate  from  Memphis  to  the  focal  station. 

The  total  shipments  from  Louisville  to  all  stations  between 
♦Memphis  and  Brownsville  during  the  fiscal  year  ending  June 
30,  1888,  amounted  to  194,800  pounds,  a  large  part  of  which 
was  properly  charged  local  rates,  they  being  less  than  the  com¬ 
bined  rates.  The  total  revenue  derived  from  the  shipments  from 
Louisville  to  the  stations  near  Memphis  just  named,  on  which 
the  combined  rate  was  less  than  the  local  rate,  would  be  but  a 
small  portion  of  the  expense  that  would  have  been  incurred  in 
printing  tariffs  showing  the  rates  in  dollars  and  cents  that 
resulted  from  combining  the  two  tariffs  during  that  period. 

Unless  it  can  be  shown  that  the  owners  of  the  property  trans¬ 
ported  were  unjustly  charged  more  than  the  sum  of  the  competi¬ 
tive  and  local  rates,  the  company  is  justified  in  not  incurring  the 
labor  and  expense  that  would  have  been  necessary  in  order  to 
have  printed  the  actual  rates,  when  such  labor  and  expense 
would  have  been  of  benefit  to  no  one. 

t 


17 


Q.  Do  we  understand  that  you  do  not  have  a  tariff  sheet 
printed  and  posted  in  your  offices  so  that  a  shipper  at  any  time 
would  be  enabled  to  ascertaii>  what  the  rates  are  at  that  time? 

A.  As  heretofore  stated,  the  tariffs  printed  and  posted  do  not 
show  in  all  cases  the  actual  rate  that  may  be  made  by  combining 
the  rate  from  one  competitive  point  to  another,  say  from  Louis¬ 
ville  to  Memphis,  with  the  local  rate,  say  from  Memphis  to  the 
adjacent  local  stations,  when  such  combined  rates  are  less  than 
the  rate  from  the  competitive  point,  Louisville,  to  the  local  sta¬ 
tion  direct. 

Q.  They  show  a  rate,  do  they  ? 

A.  Yes,  sir. 

Q.  But  that  is  sometimes  greater  than  the  actual  rate? 

A.  Such  rates  from  a  competitive  point  to  stations  near  a  dis¬ 
tant  competitive  point  are  often  greater  than  the  actual  rate  that 
may  be  made  by  combining  the  competitive  with  the  local  rates ; 
but,  as  heretofore  explained,  our  agents  are  instructed  to  in  no 
case  charge  more  than  the  sum  of  the  two  rates.  The  shipper 
can,  if  he  is  advised,  ship  the  property  to  the  competitive  point 
and  then  reship  to  destination.  Should  we,  by  neglect  or  for 
other  reasons,  induce  the  shipper  to  do  this,  we  would  incur  the 
extra  expense  of  transporting  the  property  to  the  competitive 
’point  and  back  to  the  intermediate  station  without  securing  any 
additional  revenue.  There  is,  therefore,  no  inducement  for  us 
to  undertake  to  exact  more  than  the  sum  of  the  two  rates. 

AVhile  these  tariffs,  in  these  exceptional  cases,  may  be  a  tech¬ 
nical  violation  of  the  6th  section  of  the  act  to  regulate  com¬ 
merce,  the  violation  is  more  apparent  than  real ;  as  practically 
no  traffic  is  shipped,  say  from  Louisville  to  stations  near  Mem¬ 
phis,  the  traffic  of  all  such  stations  being  confined  to  the  nearest 
commercial  center.  The  small  stations  near  Memphis,  up  as  far 
as  Brownsville,  do  practically  all  their  business  with  the  city  of 
Memphis,  and  therefore  get  the  benefit  of  competitive  rates  upon 
traffic,  not  only  from  Louisville,  but  also  from  all  parts  of  the 
country  to  Memphis.  There  is,  therefore,  no  actual  violation  of 
the  6th  section  of  the  act  to  regulate  commerce. 

Q.  We  are  familiar  with  all  that  argument,  and  I  was  calling 

attention  by  the  question  I  put  to  the  method  of  making  up  these 

3 


18 


rate  sheets  that  are  put  before  the  puljlic.  Of  course  Memphis 
is  not  the  only  place. 

A,  The  same  conditions  exist  near  all  water  competing  points. 

Q.  For  instance,  Nashville  and  Decatur. 

A.  Not  Decatur;  but  between  Cincinnati  and  Louisville, 
between  Cincinnati,  Louisville,  and  Evansville,  between  Cincin¬ 
nati,  Louisville,  Evansville,  Shawneetown,  St.  Louis,  Nashville, 
Montgomery,  Mobile,  New  Orleans,  Pensacola,  etc.  These  are 
the  principal  points  where  we  come  in  direct  competition  with 
water  lines.  The  same  conditions  exist  at  one  or  two  other 
points  on  our  system  where  we  do  not  come  in  direct  competi¬ 
tion  with  water  lines.  I  recall  now  only  Birmingham,  Ala.,  and 
Lexington,  Ky.,  where  the  same  conditions  exist  to  a  certain 
extent,  although  the  competition  is  not  directly  with  the  water 
carriers. 

Q.  This  is  the  point  to  which  I  wish  to  direct  your  attention  : 
Your  tariff  sheets  you  first  print  and  then  post,  and  they  are  sup¬ 
posed  to  be  for  the  information  of  the  public.  Suppose  they 
would  show,  for  example,  a  first  class  rate  from  Cincinnati  to 
Nashville  of  fifty-three  cents,  and  to  Gallatin,  nearer  to  Cincin¬ 
nati,  eighty  cents.  That  would  be  what  the  rate  sheet  would  show 
your  office,  but  the  actual  rate  would  be  something  less  than 
that,  would  it? 

A.  It  might,  provided  the  rate  to  Gallatin  on  that  class  thus 
printed  was  greater  than  the  sum  of  the  rate  on  same  class  from 
Cincinnati  to  Nashville  and  the  rate  from  Nashville  to  Gallatin. 

Q.  The  question  is,  whether  that  tariff  sheet  as  published  would 
not  tend  to  mislead  the  shipper  instead  of  giving  him  the  infor¬ 
mation  which  the  law  intended  that  he  should  have. 

A.  I  would  like  to  be  heard  on  that  question  ;  but  you  have 
already  seen  that  perhaps  it  is  a  little  hazardous  to  notice  these 
points,  as  I  am  somewhat  inclined  to  be  voluminous. 

Q.  In  the  same  connection  you  many  explain  if  this  tariff 
sheet  is  not  apt  to  mislead  your  agents. 

A.  I  will  get  to  that  point  directly.  I  am  aware  that  very 
great  stress  has  been  laid  upon  the  great  importance  of  the  fea¬ 
ture  of  the  act  to  regulate  commerce  requiring  the  publication 
and  posting  of  rates. 


/ 


19 

Q.  The  importance  of  it  is  not  in  question.  The  simple 
question  is,  whether  in  this  respect  your  tariff  sheets  as  you 
print  and  publish  them  do  give  the  information  which  the  law 
expects  the  public  will  have. 

A.  I  have  already  admitted  that  literally  they  do  not ;  that 
there  are  exceptions.  I  would  like  to  discuss  the  question  from 
a  practical  standpoint. 

Q.  If  you  want  to  discuss  the  importance  of  the  law,  that 
should  be  discussed  with  Congress,  not  with  us.  Here  is  a  law 
that  requires  you  to  publish  these  rates  for  the  information  of 
the  public.  Now,  as  a  matter  of  fact,  as  I  understand  you,  it 
has  a  tendency  to  mislead  the  public  instead  of  informing  them. 

A.  No  more  can  be  done  than  is  possible.  If  the  law  re¬ 
quires  a  carrier  to  do  something  that  is  impracticable,  then  it 
must  be  violated ;  and  I  do  not  believe  that  those  violating  it 
will  be  punished  for  not  doing  something  that  is  not  possible. 

Q.  In  respect  to  this,  some  gentlemen  who  have  preceded  you 
have  shown  that  they  make  up  their  tariff  sheets  in  a  different 
way  ;  and  let  me  ask  you  now,  suppose  the  rate  from  Cincinnati 
to  Nashville  be  fifty-three  cents,  as  appears  here,  first  class,  and 
from  Nashville  back  to  Gallatin  fifteen  cents,  what  is  the  diffi¬ 
culty  in  stating  on  your  rate  sheets  that  the  rate  from  Cincinnati 
to  Gallatin,  first  class,  is  sixty-eight  cents,  instead  of  stating  as 
you  do  now,  that  it  is  eighty  cents  ? 

A.  I  think  I  have  heretofore  explained  fully  the  difficulties 
of  publishing  the  actual  rates  in  dollars  and  cents  between  one 
competitive  point  and  a  local  station  adjacent  to  another  com¬ 
petitive  point  made  by  combining  the  rates  made  in  competition 
with  water  carriers  with  the  rates  from  the  competitive  point  to 
such  adjacent  local  stations ;  that  while  it  is  possible,  it  is  imprac¬ 
ticable  ;  that,  while  this  may  be  a  technical  violation  of  the  act  re¬ 
quiring  the  printing  and  posting  of  tariffs,  there  is  no  actual  viola¬ 
tion  of  the  spirit  of  the  act,  so  long  as  the  charge  to  shippers 
for  the  transportation  of  property  is  based  upon  a  combination 
of  the  two  rates  when  such  combination  is  less  than  the  direct 
rate. 

Q.  Then  are  we  to  understand,  because  we  want  to  under¬ 
stand  you  as  we  go  along,  that  from  day  to  day  you  may  change 


20 


your  local  tariff  without  putting  it  in  print,  and  without  posting 
it  in  your  offices  as  the  law  requires  ? 

A.  We  do  not  from  day  to  day  print  and  post  changes  in  the 
local  tariff  resulting  from  the  changes  that  may  be  made  in  rates 
from  one  competitive  point  to  another;  but,  if  we  are  justified 
in  meeting  the  rates  of  competing  water  carriers,  we  can  not 
avoid  changing  the  rates  from  a  competitive  point  to  local  sta¬ 
tions  adjacent  to  another  competitive  point  as  often  as  the  rates 
between  the  competitive  points  are  changed,  as  the  shipper  has  it 
in  his  power  to  at  all  times  avail  himself  of  this  rate  by  shipping 
to  the  competitive  point  and  thence  back  to  the  adjacent  local 
station.  It  can  only  be’  avoided  by  disregarding  the  rates  of 
competing  lines,  fixing  a  rigid  rate  between  the  competitive 
points,  and  only  changing  such  rate  when  the  rates  to  local  sta¬ 
tions  are  changed;  but  that  would  not  prevent  the  owner  of  the 
property  from  availing  himself  of  the  actual  rate. 

Q,  What  do  you  refer  to  as  the  actual  rate  ? 

A.  I  refer  to  the  sum  of  the  two  rates,  say  the  rate  Louisville 
to  Memphis,  plus  the  rate  Memphis  to  the  adjacent  local  station. 

Q.  As  it  exists  from  day  to  day  ? 

At  Yes,  sir.  You  can  not  prevent  the  owner  of  the  property 
from  availing  himself  of  the  rate  based  on  a  combination  of  the 
two  rates,  because  if  your  rate  is  greater  to  the  competitive  point 
than  that  of  your  competitors,  he  can  ship  via  the  competing 
line,  and  of  course  is  only  charged  the  current  local  rate  from 
the  competing  point  back  to  the  local  station. 

Q.  How  does  he  get  the  information  as  to  what  the  rate  is? 

A.  I  have  already  referred  to  the  fact  that  great  importance 
has  been  placed  upon  the  provision  of  the  act  to  regulate  com¬ 
merce  requiring  the  printing  and  posting  of  tariffs  in  all  the 
offices  of  the  company.  That  requirement  is  like  many  enact¬ 
ments  of  States,  and,  possibly,  of  Congress,  of  no  value  or  benefit 
to  any  one — superfluous  legislation — a  regulation  that  is  certain 
to  become  inoperative.  I  think  I  can  give  some  practical  illus¬ 
trations  to  sustain  my  position.  Some  ten  years  since  the  legis¬ 
lature  of  the  State  of  Kentucky  enacted  a  law  requiring  railroad 
companies  to  post  “  schedules  of  the  rates  of  freight  actually 
charged,’^  and  I  doubt  if  an  officer  or  agent  of  any  of  the  rail- 


21 


road  companies  in  the  State  knew  of  the  existence  of  the  act, 
with  perhaps  the  following  exceptions : 

Q.  That  really  has  no  bearing  whatever  on  any  thing  that  is 
before  ns. 

A.  If  you  will  permit  me  to  proceed,  I  will  endeavor  to  an¬ 
swer  your  questions. 

Q.  If  you  are  coming  to  that  point,  we  will  wait  for  you. 

A.  A  few  years  ago  the  Louisville  &  Hashville  Railroad 
Company  was  indicted  at  one  of  its  stations  for  not  posting  its 
tariffs,  and  fined  one  hundred  dollars,  thus  bringing  the  existence 
of  the  act  referred  to'  to  the  attention  of  some  of  the  officers  of 
the  company  in  a  forcible  way.  On  investigation  we  found  that 
the  person  who  reported  the  company  to  the  grand  jury,  and 
thus  secured  the  indictment,  was  not  a  shipper,  had  never  shipped 
any  thing ;  and  apparently  the  only  motive  prompting  him  to  be 
thus  officious  in  a  matter  that  could  not  in  any  way  benefit 
him,  was  to  demonstrate  that  he  was  wiser,  at  least  in  regard  to 
some  matters,  than  some  of  his  neighbors.  I  was,  on  yesterday, 
told  by  our  attorney  for  Tennessee,  that  a  similar  law  has  for 
several  years  past  been  in  effect  in  Tennessee.  His  statement 
was  the  first  information  I  have  had  of  the  existence  of  such  a 
law,  and  I  doubt  if  a  railroad  official  or  shipper  aware  of  its  ex¬ 
istence  can  be  found  in  Tennessee. 

The  difficulty  of  enforcing  a  law  requiring  the  posting  of 
tariffs  for  the  benefit  of  the  public,  which  no  one  desires  to  use 
or  examine,  and  which  consequently  are  of  no  benefit  to  any  one, 
is  apparent.  Nevertheless,  in  compliance  with  the  act  to  regu¬ 
late  commerce,  we  have  endeavored  to  publish  and  post  tariffs  at 
all  our  stations ;  but  I  venture  the  assertion  that  they  have  not 
been  examined  by  shippers  during  the  twenty  months  that  they 
have  been  so  posted.  In  practice,  such  shippers  as  desire  infor¬ 
mation  relative  to  rates,  especially  at  the  smaller  stations,  will  not 
examine  the  posted  tariffs,  but  will  insist  on  getting  the  informa¬ 
tion  from  the  agent,  and  will  require  the  agent  to  insert  rates  in 
-the  bill  of  lading. 

It  has  been  the  practice  of  the  Louisville  &  Nashville  Rail¬ 
road  Company  in  the  past  to  require  shippers  at  important  points 
like  Louisville  to  keep  advised  of  the  rates,  furnish  and  fill  out 


22 


bills  of  lading,  insert  rates,  etc.;  but  competition  now  usually 
forces  it  to  furnish  the  shippers  with  bills  of  lading,  fill  them 
out,  and  insert  the  rates.  At  such  points  there  is  no  diffi¬ 
culty  in  the  shippers  being  fully  advised  relative  to  rates,  as 
they  are  inundated  with  them,  and,  as  a  general  thing,  almost 
continuously  importuned  by  the  various  soliciting  agents  for 
their  patronage. 

Commissioner  Walker :  You  say  that  your  tariffs  do  not  have 
the  true  information,  and  I  do  not  see  why  any  shipper  should 
want  to  consult  them. 

A. 'Our  tariffs  do  furnish  true  information  except  in  the  cases 
which  I  have  endeavored  to  explain ;  and  such  exceptions  are 
applicable  only  to  traffic  that  is  relatively  of  no  importance. 
Shippers  do  not  care  to  spend  time  in  studying  classifications 
and  rates.  If  they  want  a  rate  at  all,  they  want  it  inserted  in 
their  bill  of  lading  or  contract. 

Q.  In  connection  with  that,  it  may  be  that  sometimes  your 
agents  are  misled.  We  find  that  when  they  draft  a  bill  of  lad¬ 
ing  they  put  in  it  the  erroneous  rate. 

A.  It  seems  to  be  assumed  that  the  Louisville  &  Nashville 
Railroad  Company,  through  its  various  officers  and  agents,  is 
engaged  in  robbing  or  defrauding  its  patrons,  or  that  portion  of 
them  who  are  not  sufficiently  informed  or  experienced  in  ship¬ 
ping  transactions  to  protect  themselves.  There  is  no  foundation 
for  this.  Thousands  of  transactions  are  daily  made,  not  only 
with  patrons  who  can  neither  read  nor  write  or  who  may  deliver 
their  property  for  shipment  by  the  hands  of  ignorant  servants, 
but  also  by  merchants  doing  the  most  extensive  business,  and 
who  have  transacted  business  with  the  company  for  many  years, 
and  who  rely  implicitly  on  the  fair  dealing  of  the  company,  so 
much  so  that  they  never  insert  or  require  the  company  to  insert 
rates  in  bills  of  lading.  Notwithstanding  these  thousands  of 
daily  transactions,  I  am  sure  that  there  has  not  been  before  your 
honorable  body  a  single  complaint  against  the  company,  sus¬ 
tained  by  evidence  showing  an  intentional  effort  to  defraud  its 
patrons  by  charging  more  than  the  tariff  rates  or  more  for  one 
shipper  than  another  of  like  kind  of  property  under  similar 
circumstances  and  conditions. 


23 


In  the  many  thousands  of  transactions,  some  of  which  are 
necessarily  made  with  agents  of  but  ordinary  intelligence,  occa¬ 
sional  errors  must  arise.  To  insure  accuracy  and  guard  against 
errors,  the  following  checks  are  provided :  (1)  the  delivering 
agent  is,  by  the  rules  of  the  company,  made  responsible  for  the 
correctness  of  the  rates  charged  upon  all  shipments  received  at 
his  station,  thus  checking  the  forwarding  agent.  (2)  Copies  of 
all  manifests  are  furnished  to  and  carefully  revised  in  the  audit 
office.  If  any  errors  are  made  that  are  not  corrected  by  the 
agent  at  destination,  they  should  be  promptly  corrected  by  the 
auditor's  assistants.  I  repeat,  that  legislation  requiring  the  post¬ 
ing  of  tariffs  is  superfluous;  that  the  shipper  in  Cincinnati  desir¬ 
ing  to  know  the  rate  to  Gallatin  would  not  go  or  send  to  the 
office  to  examine  the  posted  tariff,  but  would  apply  to  the  agent 
for  the  rate  and  require  it  to  be  inserted  in  the  bill  of  lading. 
Nevertheless  the  company  does  comply  with  the  law  by  posting 
tariffs  which  show  the  actual  rates  upon  practically  all  the  prop¬ 
erty  transported. 

Commissioner  Walker:  I  think  you  are  very  much  mistaken 
in  assuming  that  that  is  the  principal  object  of  the  requirement 
in  the  statute — that  the  principal  object  is  the  giving  of  informa¬ 
tion  to  the  public.  It  was  not  so  claimed  by  the  railroad  gen¬ 
tlemen  who  testified  before  the  congressional  committee.  Thev 
did  not  understand  that  that  was  one  of  the  most  important  feat¬ 
ures  of  the  law.  They  have  other  important  objects  in  view. 
We  have  nothing  to  do  with  these  matters  you  speak  of.  We 
are  simply  to  see  whether  or  not  the  law  is  obeyed. 

A.  I  am  aware  that  it  has  been  claimed  that  requiring  car¬ 
riers  to  post  and  publish  their  rates  at  points  like  St.  Louis  and 
Chicago,  where  competition  is  excessive  and  where  at  times  great 
irregularities  prevail,  would  be  beneficial  by  enabling  each  car¬ 
rier  to  be  advised  as  to  the  actual  rates  made  by  competitors ; 
but  so  far  as  I  am  advised  it  has  not  had  this  effect,  and  I  doubt 
if  anv  such  use  has  ever  been  made  of  the  tariffs  that  mav  have 
been  posted.  But  were  the  contrary  the  case,  these  conditions 
would  not  apply  to  the  miscellaneous  business  of  the  country. 
We  have  nearly  nine  hundred  stations  on  our  lines,  and  no  such 
conditions  are  in  existence  at  any  of  them. 


24 


The  fact  on  your  line  is  this,  as  I  understand  you,  that 
you  have  rates  for  instance  from  Louisville  to  Memphis,  and 
under  those  rates  shipments  are  made  according  to  the  Southern 
Railway  and  Steamship  Association  classification. 

A.  The  classification  of  the  Southern  Railway  and  Steamship 
Association  can  not  be  said  to  be  applicable  to  the  traffic  between 
Louisville  and  Memphis,  as  much  the  larger  portion  of  the  ton¬ 
nage  transported  consists  of  articles  on  which  what  are  termed 
commodity  rates  are  made. 

Q.  Say  Louisville  to  Nashville. 

A.  The  classification  of  the  Southern  Railway  and  Steamship 
Association  does  not  apply  altogether  to  traffic  between  Louis¬ 
ville  and  Nashville.  The  traffic  from  Louisville  to  Nashville 
and  Memphis  is  taken  in  competition  with  water  carriers;  and, 
while  the  Southern  Railway  and  Steamship  Association  classifi¬ 
cation  is  used  as' a  basis,  there  are  numerous  changes  or  modifi¬ 
cations. 

Q.  From  Louisville  to  Nashville  the  usual  plan  is  to  make 
them  under  the  Southern  Railway  and  Steamship  Association 
classification  ? 

A.  A^es,  sir;  with  numerous  exceptions. 

Q.  It  is  some  classification  of  that  sort? 

A.  Yes,  sir. 

Q.  But  in  order  to  get  the  rate  from  Louisville  to  Gallatin 
you  took  that  Nashville  rate  under  one  classification,  and  then 
you  looked  up  the  rate  from  Nashville  to  Gallatin  in  another 
classification  and  added  the  two  together,  so  that  in  every  rate 
from  a  terminal  point  to  a  lo^cal  station  you  have  to  use  two  rate 
issues  combined  with  two  classification  sheets? 

A.  In  arriving  at  the  rate  on  any  specified  article  from  Louis¬ 
ville  to  Gallatin,  you  would  first  ascertain  what  the  rate  would  be 
by  adding  the  rate  from  Louisville  to  Nashville  to  the  rate  from 
Nashville  to  Gallatin  ;  and,  if  the  sum  of  these  two  rates  should 
be  less  than  the  local  tariff  rate  from  Louisville  to  Gallatin,  it 
would  be  the  rate  charged.  If  the  sum  of  the  two  rates  should 
be  greater  than  the  local  rate  from  Louisville  to  Gallatin,  the 
local-  rate  would  be  used.  The  fact  is,  that  the  rate  on  some 
articles  from  Louisville  to  Gallatin,  based  on  a  combination  of 


25 


the  two  rates,  is  less  than  the  local,  and  on  many  the  combina¬ 
tion  is  greater  than  the  local  rate.  But  this  does  not  by  any 
means  apply  to  every  rate  from  a  terminal  point  to  a  local  sta¬ 
tion,  but,  as  heretofore  stated,  applies  to  comparatively  few  sta¬ 
tions  near  the  competitive  points,  between  which  little  or  no 
traffic  is  moved. 

Commissioner  Morrison  :  Do  your  competitors  know  what 
the  rates  are  to  these  points  ? 

A.  We  are  supposed  not  to  have  competitors  for  local  traffic. 
If  our  competitors  desire  to  issue  through  rates  to  our  local  sta¬ 
tions,  they  must  be  governed  our  local  rates  and  classifications. 

Q.  How  are  they  to  ascertain  the  local  rates  ? 

A.  From  our  published  tariffs.  The  investigation  seems  to 
proceed  upon  the  idea  that  the  carriers  are  trying  to  conceal 
their  rates.  The  management  of  the  Louisville  &  Nashville 
Bailroad  Company  has  never  advertised  its  facilities  for  the 
transportation  of  property  except  in  one  way,  namely,  by  the 
publication  and  circulation  of  its  tariffs.  At  important  points 
like  Louisville,  when  material  changes  are  made,  a  revised  tariff 
is  issued  and  extensively  distributed  among  our  patrons  at  that 
point.  In  many  instances,  in  addition  to  distributing  it  among 
shippers  at  Louisville,  in  order  to  induce  patrons  to  seek  the 
Louisville  market  and  ship  via  the  Louisville  &  Nashville  Rail¬ 
road,  large  sums  of  money  have  been  spent  in  distributing  such 
tariffs  throughout  the  country ;  for  instance,  at  times  when  new 
tariff's  have  been  published  showing  rates  for  the  transportation  of 
property  between  Louisville  and  stations  on  the  Mobile  &  Ohio 
Railroad,  several  hundred  dollars  have  been  expended  in  dis¬ 
tributing  such  tariffs  by  mail  to  merchants  located  at  points  on 
the  line  of  that  railroad  and  at  towns  adjacent  thereto. 

So  far  as  I  can  see,  there  can  be  no  possible  inducement  for 
carriers’  concealing  their  rates.  The  management  of  the  Louis¬ 
ville  &  Nashville  Railroad  Company  earnestly  desires  to  comply 
with  the  law  by  publishing  the  actual  rates ;  and,  as  heretofore 
stated,  where  we  encounter  the  difficulties  in  adjusting  rates  to 
stations  near  competitive  points,  the  traffic  is  nominal  in  amount, 
and  is  mainly  confined  to  miscellaneous  articles. 

Shipments  of  live  stock,  grain,  lumber,  etc.,  from  Gallatin 

4 


26 


are  considerable,  and  there  is  of  course  not  the  sliglitest  diffi¬ 
culty  in  publishing  the  actual  rates  on  these  articles,  while  the 
difficulties  that  have  been  heretofore  explained  do  arise  in  pub¬ 
lishing  the  actual  rates  to  Gallatin  on  miscellaneous  articles;  but 
our  statistics  show  that  nearly  all  such  articles,  such  as  groceries, 
boots  and  shoes,  dry  goods,  etc.,  received  at  Gallatin,  are  shipped 
from  Nashville,  not  Louisville. 

’  As  the  Louisville  &  Nashville  Railroad  Company  acquired 
the  railroads  belonging  to  different  corporations  and  combined 
them  into  a  system,  it  did  not  attempt  to  adjust  rates  so  as  to 
disturb  the  commercial  conditions  existing  at  the  time.  It  made 
no  attempt  to  adjust  its  tariffs  so  as  to  divert  traffic  from  one 
point  to  another  in  order  to  give  it  the  long  haul  as  against  the 
short  haul.  As  an  illustration  :  When  the  Louisville  &  Nash¬ 
ville  Railroad  Company,  in  1880,  acquired  control  of  the  Mobile 
&  Montgomery  Railroad,  it  continued  to  adjust  rates,  say  between 
Louisville,  Cincinnati,  and  other  competitive  points  on  its  lines 
and  local  stations  between  Montgomery  and  Mobile  upon  approx¬ 
imately  the  same  basis  as  had  been  used  in  adjusting  rates  be¬ 
tween  same  points  theretofore,  namely,  by  adding  the  rate,  say 
from  Louisville  to  Montgomery  to  the  local  rate  from  Montgom¬ 
ery  to  the  local  station  beyond.  It  continued  to  interchange 
traffic  with  connecting  roads  at  Montgomery  and  local  stations 
between  Montgomery  and  Mobile  upon  the  same  basis,  so  that  it 
is  probable  that  the  traffic  directly  and  indirectly  interchanged 
between  points  on  or  reached  via  the  Western  Railway  of  Ala¬ 
bama  and  the  Central  Railroad  of  Georgia  and  points  between 
Montgomery  and  Mobile  is  relatively  as  great  as  it  was  prior  to 
the  time  the  Louisville  &  Nashville  Railroad  Company  secured 
control.  The  same  is  true  of  traffic  from  and  to  stations  between 
New  Orleans  and  Mobile.  No  effort  has  been  made  to  divert 
traffic  from  the  two  points  named.  Rates  are  not  made  relatively 
high  to  New  Orleans  and  low  to  Cincinnati  or  Louisville,  but 
have  been  left  very  much  as  they  existed  when  the  road  between 
New  Orleans  and  Mobile  was  operated  by  an  independent  cor¬ 
poration.  It  is  true  that  the  miscellaneous  traffic  of  some  of 
these  roads  is  unimportant.  No  traffic  originates  between  New 
Orleans  and  Mobile  except  lumber,  and  that  is  nearly  all  moved 


27 


by  water  carriers.  The  amount  of  agricultural  products  in  ex¬ 
cess  of  the  requirements  of  the  inhabitants  is  nil. 

An  examination  of  the  statistics  compiled  by  the  Louisville 
&  Nashville  Railroad  Company  will  sustain  the  statement,  that 
while  the  published  tariffs  do  not  in  all  cases  show  the  rate  that 
may  be  made  by  a  combination  of  local  and  competitive  rates, 
and  to  that  extent  it  may  be  said  are  not  in  strict  compliance 
with  the  6th  section  of  the  act  to  regulate  commerce,  there  is  no 
actual  violation  of  the  law,  inasmuch  as  the  charge  upon  the 
property  actually  transported  is  not  in  excess  of  the  rate  made 
by  a  combination  of  the  two  taritis  when  such  combination  pro¬ 
duces  a  lower  rate  than  the  direct  rate. 

In  making  such  a  multiplicity  of  transactions  errors  may  oc¬ 
casionally  be  made.  Instructions  to  agents  may  not  in  all  cases 
be  clear  and  explicit,  or  the  agent  may  overlook  his  instructions, 
as  the  agent  at  New  Orleans  did  when  asked  for  a  rate  on  sugar 
from  New  Orleans  to  Glasgow.  It  had  for  a  long  time  been 
the  custom  of  the  man  that  asked  for  this  information  to  buv  his 
sugar  at  Louisville,  Cincinnati,  or  eastern  points.  He  also  showed 
his  ability  to  protect  himself  had  the  company  attempted  to 
charge  him  the  erroneous  rate  quoted,  as  he  was  fully  advised 
of  the  rate  to  Louisville  and  the  rate  from  Louisville  to  Glasgow, 
and  could  have  shipped  via  Louisville,  either  via  the  Louisville 
&  Nashville  Railroad  or  competing  lines. 

The  Chairman  •  Does  this  complete  your  statemeut,  Mr. 
Smith  ? 

A.  I  have  confined,  my  remarks  to  rates  upon  freight  traffic 
between  points  on  the  lines  of  the  Louisville  &  Nashville  Rail¬ 
road.  There  are  other  points  not  directly  on  our  line  where 
the  rate  is  less  for  the  longer  than  for  the  shorter  distances. 
Some  time  since  I  had  some  correspondence  with  you  relative  to 
a  report  made  by  a  person  living  on  the  line  of  the  Knoxville 
&  Ohio  Railroad,  between  Jellico  and  Knoxville,  to  the  effect 
that  the  rate  from  Louisville  to  Knoxville  was  less  than  from 
Louisville  to  intermediate  stations.  The  facts  in  that  case  are, 
that  the  East  Tennessee,  Virginia  &  Georgia  Railroad  Company, 
controlling  the  Knoxville  &  Ohio  Railroad,  was  willing  that  the 
rates  from  Louisville  to  stations  between  Jellico  and  Knoxville 


28 


should  not  be  greater  than  to  Knoxville,  and  they  made  a  rea¬ 
sonable  proposition  for  a  division  of  the  revenue  that  would  be 
derived  from  the  transportation  of  the  property  at  Knoxville 
rates.  The  Louisville  &  Nashville  Railroad  Company  declined 
to  become  a  party  to  such  an  arrangement,  for  the  reason  that 
the  making  of  the  rates  from  Louisville  to  stations  between 
Jellico  and  Knoxville  the  same  as  from  Louisville  to  Knoxville 
would  in  some  instances  make  the  rates  to  such  stations  less 
than  to  some  of  the  stations  on  the  Louisville  &  Nashville  Rail¬ 
road  north  of  Jellico.  The  Louisville  &  Nashville  Railroad 
Company  has  built  a  railroad  into  this  mountainous  district,  the 
cost  of  construction  being  very  great.  Before  the  road  was  con¬ 
structed  the  country  was  practically  valueless,  it  not  being 
adapted  to  agricultural  products,  but  being  possessed  of  great 
mineral  wealth  and  valuable  forests. 

The  Louisville  &  Nashville  Railroad  Company  is  now  en¬ 
gaged  in  building  a  branch  from  Pineville  to  Cumberland  Gap. 
In  building  these  railroads  great  benefits  have  been  conferred 
upon  the  country.  The  values  of  the  lands  owned  by  some  of 
the  people  have  in  some  instances  been  increased  a  hundred-fold. 
Many  people  have,  almost  without  their  knowledge,  been  made 
comparatively  rich.  The  property  shipped  into  that  country  is 
being  transported  at  a  cost  very  much  less  than  was  incurred  in 
transporting  like  property  before  the  railroad  was  constructed. 
So  far  as  I  know,  the  people  are  perfectly  willing  to  pay  iis  bur 
local  rates  on  any  traffic  they  receive  and  ship.  This  may  be  taken 
as  an  illustration  of  the  hardship  that  would  be  entailed,  should 
it  be  decided  that  the  rates,  say  from  Louisville  to  Knoxville, 
should  not  in  any  case  be  less  than  the  rates  to  intermediate  sta¬ 
tions.  The  people  who  pay  the  local  rates  are,  so  far  as  we  are 
advised,  perfectly  satisfied,  while  the  people  of  Knoxville,  hav¬ 
ing  had  the  benefits  of  reduced  rates  for  years,  would  certainly 
deem  it  a  hardship  if  for  any  reason  the  same  rates  should  be 
made  applicable  to  intermediate  local  stations. 

I  do  not  know  that  I  have  any  thing  more  to  say,  but  I  shall 
gladly  answer  any  qj^uestions  that  you  may  desire  to  ask. 


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